Lower Tariffs Could Be Ahead. Here’s Why.

U.S. Trade Representative Chief Jamieson Greer provided clarity on tariff policy during a Council on Foreign Relations event, indicating potential changes to current trade measures. The 10% temporary tariffs set to expire in July may be reimposed, while some tariffs on Chinese trade and other goods could be lowered. Greer emphasized that tariffs would remain in place for unbalanced trade, even with neighbors like Mexico and Canada, but acknowledged flexibility in reducing rates from last year’s levels. The average effective tariff rate stands at 11.8% as of April, down from an 18% peak last year but significantly higher than the pre-Trump administration average of 2%. Greer stated a draft proposal is ready for the Board of Trade, with plans to seek public input on lowering tariffs for approximately $30 billion in non-sensitive Chinese goods. Legal challenges remain unresolved, as the Supreme Court struck down global tariffs and a Court of International Trade ruled the current 10% tariffs illegal under Section 122—a decision the administration is appealing. Greer acknowledged uncertainty over legal authority for tariffs, noting Congress likely cannot restrict their use to a single term. Most investors are now focusing on two Section 301 investigations into excess capacity and forced labor, which could rebuild tariffs totaling around $150 billion. However, Greer suggested the administration may avoid major tariff hikes before the midterm elections, opting to maintain the current 10% range. Inflationary pressures, exacerbated by the war in Iran, have influenced trade policy discussions. Greer’s remarks suggest the U.S. may prioritize targeted adjustments over broad tariff increases, with some trade pacts already offering exemptions for certain goods. Analysts, including Henrietta Treyz of Veda Partners, expect tariffs to remain near the current 10% level until after the midterms, pending public feedback and legal resolutions.